Mis-Selling of Life Cover and Payment Protection Policies
Friday, September 11th, 2009Summary
The manner in which the business is dealing with the mis-selling of life insurance. The complicationsconnected to payment protection policies are pointed out.
The mis-selling of life insurance cover by a significant number of mortgage lenders has to be attended todealt with|tackled} by the Government. Action has been taken by the Department of Trade and Industry, who have practically completed their enquiriesinto the tie in of home insurance with a mortgage. An announcementpreventing the procedure is Mr Sissonsgoes on saying that while lenders may not demand that customers take out Life Insurance Quotations , they can be convinced that they do not have a choice, through the lender being economical with the truth.
48 per cent of life cover is sold by mortgageproviders, however it can be bought through independent advisers or direct providers.
However a Department of Trade and Industry spokesman has said that their investigation carries on into a massive range of insurance lock ins. A lender who met Gordon Brown has said that life insurance has been looked at in passing , while more emphasis has been centred on home and contents.
The problem with clients being pressured into buying uncompetitive life cover and home and contents insurance policies is equally important for both commodities.
The problems are especially serious with payment protection insurance. About half of all clients who have been persuaded to take out a payment protection insurance may have been given the wrong product. In addition the the greater part of those who purchased one of these dubious policies expect a lot more than they would in truth collect if they were unable to pay their bills.
A wide-reaching investigation has brought to light that around 25 per cent of the population are under the illusion that they will receive a monthly income from their Payment Protection Insurance policy, rather than understanding the policy would only cover their debts.
A further twenty per cent said they thought the insurance would protect them if they could no longer meet their repayment obligations for any reason, and 6% said they thought| their medical expenses would be paid if they fell ill.
Several people thought the policy would carry on indefinitely to meet their ongoing debts, others thought their policy would cover motor car breakdowns and household bills.
Yearly sales of PPI policies are said to create payments of about 5.3 billion pounds for the finance business. However an amazing 4 billion pounds of this is said to be pure profit. Investigations suggest that a few banks can charge up to 500% more than others for a comparable product.
The OFT is studing the sale of Payment Protection Insurance following objections from Citizens Advice and the National Consumer Council. It recently empasized disquiet that banks are luring in customers by advertising seemingly cheap loans and then hitting them with massive additional costs by selling expensive PPIas part of the transaction.
As a result, a loan which appears to provide good value becomes far more expensive.